Can a Semi Truck Drive Tesla Inc Stock If All Eyes Are on the Model 3 Car?

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TSLA stock - Can a Semi Truck Drive Tesla Inc Stock If All Eyes Are on the Model 3 Car?

Source: Tesla

Over the weekend, Tesla Inc (NASDAQ:TSLA) CEO Elon Musk tweeted out an update on a new product: the new Tesla semi truck. In typical TSLA stock price fashion, it took a few hours to have an impact. The stock opened lower on the day, a few pennies north of $300, before rallying more than 4%.

Should we be excited or is that a buy-the-rumor, sell-the-news event? According to Musk, we ought to be quite excited. “Tesla Semi Truck unveil to be webcast live on Thursday at 8pm! This will blow your mind clear out of your skull and into an alternate dimension,” he said in his tweet.

It’s About Range and Price

According to a report from Reuters, the big rig could handle a range of 300 miles per charge. A Bernstein analyst predicts 300-450 miles.

Cost and range. Those are the two biggies for me. How much will it cost Tesla to produce and what’s the price tag? Will shipping companies get an appropriate ROI out of it, or will constant charging and a high price point make conventional diesel engines more attractive? I expect Tesla to impress on range capabilities. I don’t expect to hear how much it will cost, though. It’s might be too early to say anyway.

According to some sources (linked in the Reuters story), full scale production could come to fruition in 2019, with deliveries set for 2020. I’m expecting Tesla to talk up its self-driving technology for the semi truck. After all, that’s what makes “platooning” really possible. That is, essentially, a group of autonomous trucks following a lead driver. Platooning should also help on range efficiency.

Is Tesla’s end game really about electric cars, or is it to build a fleet of self-driving on-demand vehicles and semi trucks? Maybe it’s both, but we’ll at least get a look at the latter later this week.

Can a Truck Drive Tesla Stock?

chart of TSLA stock price
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Source: Chart courtesy of StockCharts.com

For now, the news is good. TSLA stock price is rebounding nicely off $280-$290 support. Will it be enough to push TSLA stock up to $330? This level was previous support, but gave way in late-October. Worse, a bounce off the 200-day moving average sent TSLA stock back to $330, where it immediately failed and went lower.

Now on the mend, a rally to $330 on Thursday’s close could set up TSLA for the same fate. Investors could play for that ~$15 per share move into the event. However, my main focus is after the event. A close over $330 should be bought and if that does happen, a close below $330 can be used as a stop-loss.

Admittedly, this play can set up investors for “chop action,” but it’s better than buying at $330 and watching TSLA stock fall all the way back to $290 again. That said, it gives us a limited risk/reward setup in the event TSLA stock makes another run at $360 to $390.

 

In the shell of a nut, I’m a buyer on a pullback toward $290 or on a breakout over $330. My stop-loss on the former is a close below $280 and near $330 on the latter.

The Bottom Line on TSLA Stock

I’m honestly not sure what to think about this event in terms of TSLA stock price. If anyone can make an all-electric semi truck work, it’s Elon Musk. Well, and BYD Company Ltd (OTCMKTS:BYDDF). And while that may be a great feat, consider a few things:

First, a Tesla semi truck is still likely a few years away. Even a great product may take two or three years before it’s a serious reality. Second, investors’ main focus is the Model 3. The sedan is not hitting previous production targets and there are serious questions about when it will really ramp up. Admittedly, producing a car takes time and isn’t a flawless process at the start. But still, TSLA stock investors may feel that Model 3 production needs to be a bigger focus.

Third and final, cash-burn has always been an issue with Tesla and I’m hard-pressed to believe a new semi truck will ease that burden. Can Tesla get its financials trending in the right direction before that project starts to ramp up? The bulls are hoping for a yes.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.


Article printed from InvestorPlace Media, https://investorplace.com/2017/11/tsla-stock-rallies-tesla-semi-truck-news/.

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